Do Kwon To Face 12 Years in Jail After Terra Crash, Sentencing on Dec 11
The post Do Kwon To Face 12 Years in Jail After Terra Crash, Sentencing on Dec 11 appeared first on Coinpedia Fintech News
South Korean cryptocurrency mogul Do Kwon is about to face 12 years in prison for his role in the 2022 TerraUSD collapse, a “colossal” fraud that triggered $40 billion loss in users funds. Sentencing is scheduled for Dec. 11.
Crypto supporters are now wondering why such a harsh punishment, and what Do Kwon’s team says in his defense?
Do Kwon To Face 12-Year Prison Term
On December 4, a new filing was sent to Judge Paul Engelmayer in New York, where the government explained why it believes Do Kwon deserves such a long prison sentence.
Prosecutors explained that Kwon kept saying TerraUSD (UST) was safe and would always stay at $1, giving false hope to the investors.
But in May 2022, UST suddenly collapsed, and billions of dollars vanished almost overnight. They say this crash didn’t just hurt Terra investors. It triggered big problems across the whole crypto market, even contributing to failures that later connected to huge disasters like FTX.
According to the US prosecutors, Kwon hid important facts and made people trust a system that was already unstable. Because of all this, they believe 12 years is a fair sentence.
Do Kwon’s Lawyers Request a Lighter Sentence
Do Kwon’s lawyers disagree with the long sentence suggested by U.S. prosecutors. They say that a shorter sentence, around five years or less, would be more fair because the Terra crash was not caused by Kwon alone.
According to his defense team, several outside factors added to the collapse. They claim that:
- Some large traders attacked the Terra system on purpose.
- Weak points in UST’s design were taken advantage of by other firms.
- The entire crypto market was already facing big pressure at the time.
His lawyers also shared research papers and blockchain analysis to support their argument.
Do Kwon has already pleaded guilty to wire fraud and conspiracy to defraud, after being charged in March 2023 with several counts linked to fraud and market manipulation.
Sentencing is Scheduled for Dec 11
The sentencing hearing set for December 11 will mark a crucial moment not just for Kwon, but for the broader crypto world. Many victims are hoping for justice. They say Kwon destroyed families, ruined retirements, and shattered dreams.
Some people lost everything they had worked for their entire lives because they believed his promises.
Legal experts expect the judge will consider the enormity of losses and investor harm caused by the collapse.
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US Prosecutors Seek 12-Year Prison for Do Kwon Over Terra Collapse
Highlights: US prosecutors requested a 12-year prison sentence for Do Kwon after the Terra collapse. Terraform’s $40 billion downfall caused huge losses and sparked a long downturn in crypto markets. Do Kwon will face sentencing on December 11 and must give up $19 million in earnings. US prosecutors have asked a judge to give Do Kwon, Terraform Labs co-founder, a 12-year prison sentence for his role in the remarkable $40 billion collapse of the Terra and Luna tokens. The request also seeks to finalize taking away Kwon’s criminal earnings. The court filing came in New York’s Southern District on Thursday. This is about four months after Kwon admitted guilt on two charges: wire fraud and conspiracy to defraud. Prosecutors said Kwon caused more losses than Samuel Bankman-Fried, Alexander Mashinsky, and Karl Sebastian Greenwood combined. U.S. prosecutors have asked a New York federal judge to sentence Terraform Labs co-founder Do Kwon to 12 years in prison, calling his role in the 2022 TerraUSD collapse a “colossal” fraud that triggered broader crypto-market failures, including the downfall of FTX. Sentencing is… — Wu Blockchain (@WuBlockchain) December 5, 2025 Terraform Collapse Shakes Crypto Market Authorities explained that Terraform’s collapse affected the entire crypto market. They said it helped trigger what is now called the ‘Crypto Winter.’ The filing stressed that Kwon’s conduct harmed many investors and the broader crypto world. On Thursday, prosecutors said Kwon must give up just over $19 million. They added that they will not ask for any additional restitution. They said: “The cost and time associated with calculating each investor-victim’s loss, determining whether the victim has already been compensated through the pending bankruptcy, and then paying out a percentage of the victim’s losses, will delay payment and diminish the amount of money ultimately paid to victims.” Authorities will sentence Do Kwon on December 11. They charged him in March 2023 with multiple crimes, including securities fraud, market manipulation, money laundering, and wire fraud. All connections are tied to his role at Terraform. After Terra fell in 2022, authorities lost track of Kwon until they arrested him in Montenegro on unrelated charges and sent him to the U.S. Do Kwon’s Legal Case and Sentencing In April last year, a jury ruled that both Terraform and Kwon committed civil fraud. They found the company and its co-founder misled investors about how the business operated and its finances. Jay Clayton, U.S. Attorney for the Southern District of New York, submitted the sentencing request in November. TERRA STATEMENT: “We are very disappointed with the verdict, which we do not believe is supported by the evidence. We continue to maintain that the SEC does not have the legal authority to bring this case at all, and we are carefully weighing our options and next steps.” — Zack Guzmán (@zGuz) April 5, 2024 The news of Kwon’s sentencing caused Terraform’s token, LUNA, to jump over 40% in one day, from $0.07 to $0.10. Still, this rise remains small compared to its all-time high of more than $19, which the ecosystem reached before collapsing in May 2022. In a November court filing, Do Kwon’s lawyers asked for a maximum five-year sentence. They argued for a shorter term partly because he could face up to 40 years in prison in South Korea, where prosecutors are also pursuing a case against him. The legal team added that even if Kwon serves time in the U.S., he would not be released freely. He would be moved from prison to an immigration detention center and then sent to Seoul to face pretrial detention for his South Korea charges. eToro Platform Best Crypto Exchange Over 90 top cryptos to trade Regulated by top-tier entities User-friendly trading app 30+ million users 9.9 Visit eToro eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you should not expect to be protected if something goes wrong.
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